Anglo American right to scrap dividend 20 Feb 2009 The market was stung by the miner s decision not to pay a final dividend. But this isn t the time for financial brinkmanship, and traditionally cautious Anglo isn t the company to try. It still has too much debt for comfort, but fast action may keep it from a forced rights issue.
Rio’s China deal can and should be defeated 16 Feb 2009 There are two ways to undo the $19.5bn deal, which gives Chinalco too much power over the AngloAustralian miner. One is for shareholders to commit to their own capital raising; the other is for BHP to pay up for at least some of the assets the Chinese miner is set to buy.
Rio Tinto hasn’t justified bending the rules 13 Feb 2009 The miner has struck a $20bn deal with its biggest shareholder, a vassal of the Chinese state. Shareholders will get a vote on the transaction but can't put in their own money. Rio s arguments for sidestepping important market principles aren t compelling.
BHP sidelined by Rio’s £20bn cash-call 13 Feb 2009 Rio Tinto s shareholders cosy tieup with Chinalco, owned by the Chinese state, weakens the position of mining rival BHP Billiton. It will almost certainly have to abandon hopes of taking over Rio, and may find negotiation with China, its biggest customer, harder going.
Rio Tinto’s $20bn cash boost has too many strings 12 Feb 2009 The AngloAustralian miner s twostep deal with Chinese miner Chinalco dilutes shareholders and leaves a big customer with too much influence. Rio should have shopped assets around to rivals and done a rights issue. It s not too late.
Chinalco makes good on Rio Tinto 12 Feb 2009 The stateowned Chinese group bought into the AngloAustralian miner at a high price a year ago. It overpaid then, but the holding helped Chinalco get good terms on a proposed rescue package for Rio. If the deal goes though, Chinalco will have extracted what it really wanted.
ArcelorMittal proves its mettle 11 Feb 2009 The world s largest steelmaker has halved its dividend and is aggressively cutting costs. But excluding oneoff charges, Arcelor is still making money and is on track to meet its debt reduction targets. It s an impressive performance in extremely difficult conditions.
Rio Tinto gaffe leaves board discredited 9 Feb 2009 The mining giant has lost its chairman a mere three weeks after giving him the job. It seems Rio s nonexecs didn t do their homework on Jim Leng, and didn t much like his questioning of plans to raise capital from Chinese miner Chinalco. The board needs to explain itself.
Glencore takes upper hand in Xstrata’s cash call 3 Feb 2009 The two hardnosed mining firms have thrashed out a complex deal where Xstrata can raise $6bn without its biggest shareholder putting up any cash. Both sides sport battle scars. But Glencore has just about come out on top.
Chinalco looks set to mine Rio Tinto 2 Feb 2009 The Chinese stateowned aluminium producer could help the AngloAustralian miner reduce its $39bn debt burden and dodge a rights issue. But with Chinalco already sitting on a $10bn loss, Rio might have to offer a sweetheart deal. Other shareholders could find that less appealing.
BNP-Fortis saga nears acceptable compromise 30 Jan 2009 The botched sale sank Belgium s government and infuriated Fortis shareholders. A new proposal allows smarting investors to keep most of their insurance arm and reduce exposure to toxic assets. A weakened BNP will be happy to save cash and get Fortis s retail arm.
Xstrata jumps queue with $6bn rights issue 29 Jan 2009 The once acquisitive Xstrata has too much debt for these times. It is pricing its issue at a hefty 66% discount to get it away. And its largest shareholder, metals trader Glencore, is providing assets rather than cash. As rival Rio mulls its options, the cash rush has begun.
Rio Tinto grasps nettle on $39bn debt pile 10 Dec 2008 As with all nettles, there s a sting. The miner is gouging capex, hacking its workforce, and capping the dividend to save around $6.5bn next year. Rio has probably done enough to allay fears of a cash crunch but there s loads more pain ahead.
Rio Tinto’s board deserves some slack 27 Nov 2008 BHP Billiton's failed offer for the AngloAustralian miner leaves Rio's share price in tatters, but shareholders shouldn't blame Rio s resistance. A tieup probably wasn't deliverable. If Rio's board had caved in, there could have been in a painful mess.
China feels aftershock of Rio Tinto bid collapse 26 Nov 2008 Chinalco, the Chinese miner, is nursing huge paper losses on its stake in Rio Tinto. But China Development Bank, which lent Chinalco $8bn against assets now worth $3bn, may pick up the tab. It s bad timing for an institution central to China s economic stimulus plan.
Kremlin takes over at Norilsk 26 Nov 2008 The Russian government has imposed a truce and will call the shots at the world s largest nickel company, torn by a feud between two oligarchs. This should allow Norilsk to focus on shrinking markets and falling prices. But minority investors have no reason to cheer.
BHP’s about-face leaves Rio Tinto stranded 25 Nov 2008 The implosion of BHP Billiton's allstock offer for the rival miner leaves both sides redfaced. But Rio is groaning under a $38bn mountain of debt, its share price in tatters. By leaving its rival in such a tough spot, BHP may have scored a sort of victory after all.
BHP-Rio bid failure may be a happy mistake 25 Nov 2008 Rio s board looks remiss for not accepting an allshare offer when it had the chance. BHP s board looks foolish for its hubris. But given the problems a merger would have created among customers and lenders, these failings may be a blessing in disguise.
Carlyle’s exit snag underlines credit crunch lesson 17 Nov 2008 The buyout firm is suing Russia s Novolipetsk Steel for walking away from a deal to buy John Maneely. Buyout firms know the broken deals game well, often from the other side. Like recipients of LBO offers, private equity firms should stresstest their buyers.
Kremlin gets its pound of flesh from Deripaska 6 Nov 2008 The Russian government bailed out Oleg Deripaska, owner of aluminium maker Rusal, so he could keep 25% of Norilsk Nickel, which a rival oligarch controls. In exchange, it will appoint a director and two managers at the world s largest nickel producer and call the shots.